What defines an "air loan" in real estate schemes?

An "air loan" specifically refers to a type of fraudulent loan that is applied for a property that does not actually exist. This scheme typically involves the submission of false documentation and misrepresentation to lenders, convincing them to issue a loan for a property that has been fabricated or is entirely fictional.

In the context of real estate schemes, the primary characteristic of an air loan is the absence of a real property backing the loan; therefore, the lender is misled into believing they are financing a legitimate real estate transaction. This form of fraud exploits the lending process by creating an illusion of a legitimate investment while no underlying asset exists.

Other responses might involve elements that can be seen in various fraud schemes—such as inflated property values or unverified finances but these do not capture the essence of what constitutes an air loan, which is fundamentally based on the illusion of existence.